George Osborne should slash taxes in his Budget this month, according to a leading Conservative Right-winger.

In a speech today, Liam Fox will pile pressure on the Chancellor to match his reduction of welfare spending with a cut in taxes.

Dr Fox will argue that money is better left ‘in people’s pockets rather than siphoning it off for the Treasury’.

Pressure: George Osborne, left, should slash taxes in his Budget this month according to leading Conservative right-winger, former defence secretary Liam Fox, right

In remarks that will put him at odds with David Cameron, the former defence secretary will also call for the ring-fencing of NHS, schools and foreign aid budgets to be scrapped.

He will warn it is a mistake to exempt these areas from the extra cuts the Chancellor will have to make by 2015/16 to balance the books.

His remarks will cheer Tory traditionalists but worry the modernisers who have seized on spending on aid and the Health Service as proof that the party is ‘detoxifying’ its brand.

In a speech today to the Institute of Economic Affairs – with the title The Right Approach for Britain’s Economy – Dr Fox will call for capital gains tax to be cut to zero and ‘reintroduced at a more sensible level’.

‘This would create a tax window where businesses that are sitting on assets might be encouraged to sell, investment in capital becomes more attractive and where hundreds of thousands of second homes might come on to the market,’ he will say.

Capital gains tax is currently levied at 28 per cent for higher rate tax payers. Dr Fox will add in his address that ‘economic policy is not just pounds, shillings and pence’, adding: ‘It is the compass from which all other policy areas find their direction’.

Conflict: Dr Fox's remarks calling for the ring-fencing of NHS, schools and foreign aid budgets to be scrapped will put him at odds with David Cameron, pictured with both Dr Fox and Mr Osborne in 2005

He will argue against the practice of ‘repeat taxation’ where workers are billed again for the assets they purchase with their already-taxed income.

It should be a matter of principle, certainly for Conservatives and – I would argue – all others who wish to see the encouragement of thrift, self-reliance and the principle of equity that we should gradually move toward the reduction – or even abolition – of the taxes where the state not only taxes the same money on multiple occasions but discourages the very behaviour that would lead to a more responsible society.’

He will argue that the ‘great socialist coup of the last decade was making wealth an embarrassment. It is not.’

Instead, he says wealth ‘is the prize for aspiration and hard work and its side effects are higher tax revenues, more jobs and more investment’.

He will add: ‘We must, again, encourage people to dream of a better life for themselves and for their children.’

The former GP will criticise the Government for accepting the ‘socialist narrative’ of 13 years of Labour rule.